Enterprise Resource Planning (ERP) software can be a game-changer for your manufacturing operation. ERP solutions allow organizations to harness the power of data generated by your operational processes, tools and customers to dramatically improve efficiency, visibility and profitability.
In this strategic guide to planning manufacturing production cycles, we’ll highlight the ways an ERP solution designed for manufacturers can transform the way you run your business.
The Challenges and Opportunities in Manufacturing Today
Manufacturers today face several key issues that can create challenges for growth. According to a Berntson Porter & Company survey, two-thirds of manufacturers are expecting revenue growth, but face several challenges, including:
- A lack of alignment between revenue strategies and operations
- Growing competition from traditional and non-traditional players
- Government regulation
- Technological barriers
Technology is a critical part of most manufacturers’ strategic planning. Digital transformation is changing the way companies approach their work. In addition, manufacturers have to be aware of not just traditional players, but disruptive new competitors that are embracing new technologies to gain market share.
Technological innovation will continue to influence production in 2021. Robotics, which has played a role in manufacturing for decades, continues to get smarter. Artificial intelligence, edge computing and blockchain technology are likely to continue to shape the future of manufacturing across all sectors.
The Role of ERP
ERP solutions at their most basic provide integrated data collection, storage, analysis and company-wide visibility. Implementing an ERP system creates the ability to integrate functional areas of your business – including operations, material requirements planning (MRP), research and development, product planning, sales, marketing, finance, human resources, distribution and logistics – in one place. This integration of data across all departments creates end-to-end visibility throughout your whole business, allowing you to make better decisions based on one version of the truth. Without an ERP solution, many companies rely on disparate systems or spreadsheets to house and interact with data, which can create multiple versions of truth depending on which solution you choose to pull data from.
For key decision-makers, C-suite leaders and other employers, the advantages of an integrated approach to data and systems allows for new approaches to solving problems. Data reporting and displays offer a better understanding of systems, performance, patterns and opportunities for greater efficiency.
For the operations side of your business, an ERP solution can have a dramatic impact on the way you run your company. Here is a closer look at several operational areas that can reap considerable benefits from an ERP implementation.
Streamlining Supply Chain Management
Today, your manufacturing is only as effective as your supply chain. As more companies take a global approach to manufacturing, the need for transparency and collaboration is critical. An ERP solution allows you to collect and share data and see the correlations between key supply chain components, from material requirements planning to product planning to distribution.
An ERP helps you integrate the information throughout the supply chain, from suppliers to customers. By bringing together disparate players and allowing for remote access to information, companies can more rapidly solve problems, control cost and boost productivity.
Increasing Inventory Control
Manufacturers face near-constant challenges related to inventory management. Overstocked materials are costly and wasteful. Market fluctuations create uncertainty regarding demand and the need for materials and supplies.
Inventory control features in the right ERP solution enable more accurate management, with trace functionality that reaches the lot, sub-lot and serial number level. With a real-time understanding of inventory levels, organizations can gain better control of their inventory, creating more efficient manufacturing and reducing waste.
Making Order Fulfillment more Productive
By integrating the finance, product planning, production, shipping, enterprise labeling, customer service and transportation functions in one centralized location, companies are better able to fulfill orders quickly and accurately. Documentation necessary for order fulfillment, picking, packing, labeling and shipping can be integrated, shared and made accessible to all employees and functional areas.
With an ERP solution, picking processes are more accurate and orders are shipped on time, improving customer satisfaction and ensuring repeat business. Compliance can be better managed within an ERP solution because companies can integrate and document their processes clearly to ensure adherence to federal and international regulations.
Better Quality Control
Real-time access to information is a significant benefit for your quality control teams. With access to data around production processes, MRP, mixing, ingredients and recipes, intermediary products and grading data, these teams can better value, label, assess, and monitor products throughout production and while in inventory.
An ERP system allows for customized assignments of quality assurance criteria to be used for expiration dates, inspections, upstream and downstream traceability assessments and record-keeping. When faced with an inspection or audit, documentation can be provided quickly.
Optimizing Production Schedules
ERP software allows for better scheduling of production to coincide with demand, both current and anticipated. Production cycle planning is transformed by better capacity planning, bill of materials planning and shop floor control management.
When your ERP solution ties in performance management tracking and financial reporting, your planning can be even more anticipatory by factoring in lead times, material needs and supply delivery scheduling.
It becomes clear quickly that the impact of ERP solutions on manufacturing can be profound and powerful. At its core, ERP solutions are about leveraging data.
Today, there are terabytes of data available to every manufacturer. The smart factory floor has equipped machines with sensors that can collect and transmit information about operational efficiency, required maintenance and performance indicators. Products themselves can generate information either as finished goods or as raw materials. Finally, customers generate information on how products are used and consumed.
Required data varies from manufacturer to manufacturer and department to department. Without an ERP solution in place, the challenge is knowing what data is available in other areas of your company.
With an ERP solution, you’re better able to collect and reconcile this information, often using automation tools and connected devices that will share and store information in the right format and in the right place.
Business intelligence tools help to make sense of the information collected. BI tools, integrated with your ERP system, can help pinpoint trends and opportunities that otherwise may not manifest themselves.
BI tools that work alongside your ERP system can also reduce the number of redundancies in the collection and reporting of your data coming from disparate sources or in different formats. Data will be presented in real time in an actionable format that allows for better and more accurate decision-making.
With the growth of globalized demand and production, companies face increasing domestic and international compliance issues. An ERP solution helps to maintain compliance with different agencies and regulators, using automated tools to track and record lots, generate audit trails, create reports and automate the data needed to comply with legal and fiscal requirements across different jurisdictions.
In the case of a recall, your ERP solution also provides powerful tools to identify issues faster and resolve them quickly and efficiently. Powerful track-and-trace tools allow for the rapid identification of sources and destinations of affected products. Streamlined processes allow for the identification, notification and tracking required to ensure public safety and reduce the risk to your brand, bottom line and reputation.
With geopolitical instability an ever-present threat to manufacturers large and small, the need for more efficient operations is more critical than ever. ERP solutions help provide more certainty in the projections and assumptions that are used to plan and predict, and they can provide manufacturers not just with operational efficiency, but also more flexibility and confidence in decision-making.
An ERP system is also critical for manufacturers looking to become more customer-centric and responsive to evolving customer needs and demands. Customers expect to interact more with brands and for those brands to know them and how they use products. With features found in an ERP solution, companies can be more responsive to customer expectations and needs.
Some manufacturers are even adopting manufacturing-as-a-service, providing on-demand access to desired products, customizations and flexibility. With an ERP solution, manufacturers can be more responsive to the way customers want to access products.
Why Choose a Cloud-Based System?
Cloud ERP solutions offer considerable advantages to the manufacturer. Among the top benefits:
- Lower upfront costs that are shifted from capital expenditures to operating costs
- Lower operating costs as cloud solutions reduce or eliminate the need for onsite storage, maintenance, security and cooling costs
- Fast implementation and scalability. Cloud solutions allow companies to adopt quickly and gradually migrate data and systems to the ERP over time. Most cloud solutions allow you to pay for what you use, meaning that demand and usage can grow as needs present themselves.
- Updating capacity that is rapid and responsive, allowing for the newest versions of software and the newest technologies to be adopted and used quickly.
The need for powerful ERP solutions is clear. Knowing how to choose the right system is often not. NexTec helps enterprise organizations transform their businesses by providing industry-specific ERP solutions and exceptional consulting services. To learn more about how to choose the right ERP solution for your company’s manufacturing needs, reach out to us. We’d love to chat.